[hundreddaysoff]

One thing that could cause this loss of faith to occur is if the Chinese are successful with making their new E-currency a medium of exchange for Americans.

My understanding is that the modern monetary theorists have an argument as to why this hyperinflation won't happen in a country with monetary sovereignty. (All the famous historical examples of hyperinflation involve countries that do not control their own currency.)

Damned if I can find a good basic text explaining the MMT argument. Naked Capitalism makes some great allusions but seems like you need to already be on their team to understand their arguments.

Seems pretty important to understand this stuff as we are all modern monetary theorists now whether we like it or not.

[neilwilson]

It's very simple.

Have you ever held a $100 note in your hand? If you have you have necessarily caused $100 of "debt" to the nation - because you haven't immediately spent it as soon as you received it.

If you'd spent it, it would be taxed as it moves and would rapidly become a $20, then a $10 and so on.

There are lots of reasons why you, and everybody else doing the same, hasn't spent that $100 yet.

What everybody gets excited about and calls "debt" is essentially the world's working capital.

The MMT view shift is straightforward. Stop calling it "debt", and call it what it is on the other side of the balance sheet "savings" or "assets". Then all becomes clear.